Availability of climate data from private markets remained patchy in 2023, according to a study by Hymans Robertson.
This left defined benefit and defined contribution asset owners with gaps in their decision-making process and at risk of seeing their own climate reports failing to meet regulatory standards, warned the report.
Trustees who have set strong data quality objectives need their asset managers to respond, and while the Task Force on Climate-Related Financial Disclosures has driven improvements in disclosure, asset owners’ climate goals can only be supported by ongoing improvements in data gathering and reporting, the research added.
The study, which is carried out annually, assessed the extent to which private market asset managers were able to report on climate metrics across four asset classes: private debt, private equity, real estate and infrastructure.
In 2023 asset managers reported on assets totalling £93.9bn, compared to £63.9bn in 2022.
The most significant improvements were seen in the amount of data provided by private debt managers.
Response rates increased to 43 per cent from 21 per cent in 2022 and emissions data (26 per cent) was reported for the first time.
However, reporting rates across other asset classes demonstrated no material change over the year. The response rate for infrastructure managers fell to 67 per cent from 75 per cent in 2022.
The rate of reply from property managers fell to 47 per cent from 60 per cent in 2022. The lower response rate from managers reporting on property assets meant that there was less data provided on carbon emissions, with only two-thirds (62 per cent) of property funds providing this data.
Simon Jones, partner and head of responsible investment at Hymans Robertson, said there was a need for private market managers to ensure they were continually improving their climate reporting.
Jones added: “Reporting on climate data remains at a relatively early stage across most private market asset classes. However, for asset owners who have set climate goals, there is a need to understand the progress that is being made.
“Better data helps not just the reporting needs of asset owners, but it also informs their strategic decision making. This is one of the reasons why we have advocated for the adoption of data quality objectives by asset owners within the TCFD frameworks.
"Our research shows that there have been some improvements in reporting, particularly within private debt strategies, but we’ve seen little progress across other asset classes.
"We recognise that change takes time and that continued engagement with asset managers is the way by which we and our clients can help improve disclosures.
"Although reporting should not be at all costs, we prefer managers to disclose the information they have available and the reasons why there are gaps, rather than simply say nothing."
To support investors to get the information they need for decision making, reporting and governance requirements, the report highlights five recommendations for asset owners:
